can get that ctv turned around, i take a look at trade desk. dan tesla. good technical setup. >> bad sentiment, low expectations, maybe play for quarter end. >> you heard that right. he likes tesla here steve. >> we opened up talking about rates and it made me think obviously the direct play is housing. the indirect play would be home depot sort of down that line. they sell a lot of washers, sell a lot of dryers, a lot of things that are financed. rates go lower, home depot goes higher. >> thanks for watching. see you tomorrow on the exchange. mad money with jim cramer starts right now.

>> hey i'm cramer. welcome to mad money. welcome to cramer. my friends i'm just trying to make you a little money. my job is not just to entertain but to explain. figure out how days like today could even happen. so call me one 800 743 cnbc or tweet me at jim cramer this. cynics just can't believe what's happening in this market. they're so used to finding reasons to be bearish that they're being overrun by positive events. they're genuinely baffled by the tape on this terrific day where the dow gained 617 points as we jumped 0.85% and the nasdaq climbed 0.72%, with all three averages closing at record highs. >> buy, buy buy. >> can these negative day baffled? will they have to commit convert get bullish? i don't know if they can do it, but they're going to have to.

if they're going to, they want to stop losing the money that they have under management. and by the way, keeping assets under management is the name of the game on wall street. before i get to what happened today, let me go into why it is so hard to convince the pessimists to turn positive. it's the toughest thing to do first. ever since the great crash in 87, the most quoted of commentators and money managers have almost always been bearish, maybe extremely bearish, and of course, erudite. there's a sense that you simply aren't that smart if you're a bull, if you're too positive, people just don't take you seriously. you're a gadfly. it's only gotten worse since the great recession when things went really went kerflooey and those who were bullish during that period, well, they were annihilated. how were they annihilated? they were annihilated by youtube clips of them saying anything good about any stock under the sun. so why ever bother to say anything good about a stock under the sun? why ever bullish? second,

we do admittedly have a fraught backdrop $37 billion in federal debt present the market with a single true social post and the rule of law for many seeming to be in doubt. third doesn't really make sense. does it make sense to be bullish as china, russia and india get closer? while our country seems hard pressed to find allies? you look at the headlines. sometimes it feels like the world's spinning out of control. the war in ukraine is not ending. the war in gaza is not ending. we offended the koreans with this georgia ice raid, and on and on and on. to which i say, hold on, we don't trade on ukraine. i'm not thrilled to see russian drones over poland, but it doesn't matter to individual companies and their stocks. we can't sell stocks off a budget deficit, especially when interest rates are going lower as they did today. the skeptics think that's insane. everything i just said, they want to sell stocks on current events, especially this morning.

slightly higher than expected consumer price index number. how the heck can treasury yields come down on a bad inflation reading? that's not supposed to happen. they are baffled. but at the same time we got that cpi number. we got initial jobless claims number of 263,000 experts. we're looking for 235,000. but there it is again. i mean come on that's a bad number right. when you're using a bullish prism you focus not on the cpi but on the jobless claims. and that number cements the possibility of not one but multiple federal reserve interest rate cuts. which brings me to the painful truth about the bear camp. the bear simply weren't in the business or weren't even alive the last time we had a market like this. you got to be old enough like me to remember. they don't realize that you can have sessions where amazing things happen. i told you this was the year of magical thinking in the 80s and 90s. it used to happen all the time. consider just the last 24 hours. the list of amazing things is myriad. just myriad. first, we

saw one stock at 100 hundreds of billions, hundreds of billions of dollars to its market cap. not all earnings, not on sales, but on a forecast. oracle not that long ago, was a slow, steady software company before deciding to reinvent itself as a fast data center builder a couple of years later. and wall street accepts the fact that oracle is going to be the biggest data center builder. it requires a total suspension of disbelief, and that's something that the sardonic, sardonic cynics. that's a good one. sardonic cynics can't and won't accept or even appreciate. but that's really the point, isn't it? some can't believe, some don't want to believe. still others think it's too late to believe. unlike what you hear. by the way, this is not a case of fomo. that's just so wrong. people think it's funny to say fomo. these people have no problem missing out at all. they hate this market. the problem is that unless they run their own money. in other words, the family office, which is the case with the most revered

bears, the so-called smartest people on earth. they simply don't know how to get bullish. that's right. blind to the positives. they can't figure out this market. it goes against the critical faculties. they think that you're a fraud if you switch direction. that's actually wrong though, because you see their investors have plenty of fear of missing out and expect their money managers when they pay a fortune to to pivot, change direction, but be flexible. they aren't paying huge fees to miss out, which means that between now and the end of the year, when the reports come out about how they did, these bearish managers are going to have to at least pretend to be bullish and put some money to work, because otherwise investors will pull all their money out. how will they be so ideologically determined to stay bearish? right now they're being barraged with the question how much oracle do we own. surely we own oracle. no they own oracle was selling at a very high multiple and was therefore wrong to own at least for them. second, there are plenty of stocks that are cheap right now

that are going to be less cheap as they go up. these bears, though, they don't think they should be going up either. the stock of jpmorgan trades like a small cap bank stock just ripping through level after level after level, yet it still only sells for 15 times earnings after the investors find out that they don't own any oracle, they can ask, well, maybe at least own some jpmorgan. right. but the skeptics say, no, we don't own jpmorgan. it's an inflationary environment. they think they know better than we do. but the stock is the arbiter. now. there's the ipo market. the bears are looking at the number of deals that are saying, oh man, the wall street ipo machine has gone crazy. but any market historian knows that. that's simply reminiscent of previous good times. it's more of a beginning than an ending when you see these deals. the wall street promotion machine has barely gotten started. go buy some goldman sachs. then there's the research. as you might expect, when a stock has been going higher on nothing, it's going to catch a downgrade this morning. apple the stock of apple caught one downgrade. it was hideous. after some analyst said he wasn't

impressed with their new phones. i didn't like their so-called their not so hot ai strategy. now in another tape in another tape apple stock would have been oh obliterated by this by a hold. this one apple goes up $3. finally, during lesser periods, whenever you get some good news in the morning, you can be assured something bad will come later in the day that you can hang your hat on as the market sinks. no, not in this tape. are you kidding me? in the midst of a typical update comes a story about jeff marsh sitting next to jim. there's a potential. there's a takeover bid for the firm for warner brothers. discovery. come on. they got so much debt not that long ago, the skeptics were shorting the heck out of this one because of that hideous balance sheet. they got the whole zeitgeist wrong. you see, in a bull market, that balance sheet is what has kept the equity valuation down well below where it should trade to the owners of the potential acquirer of this company, paramount. skydance, including the ellison family. yeah, the

one that owns most of the largest shareholder of oracle. this potential acquisition is just a rounding error. larry ellison is worth over $300 billion. if someone wants to buy warner brothers for 440 billion he owns three years 300. someone to buy it for 40 billion. hey what the heck. could be good. look, when you have that much money, you don't need to ask yourself that question. you certainly don't ask your kid that question. the moral of the story, when there is this much money sloshing around, okay, when there are funds and families with trillions of dollars being put to work, it's awfully hard to ignore what they're going to do with that money. the bears have probably made very little money going into september, which is supposed to be a very bad month. and so if they're going to invest, they want to wait at least until the market's getting smacked around. but it's not. the clock of the year is ticking. it feels a lot like the 90s. and they only have four months to hope that this market goes lower so they can get in, even if that means abandoning their whole ideology. but the bottom line if the

bearish money doesn't pull the trigger soon and become buyers, their investors will go somewhere else and then the bull market won't be the manager's problem anymore. brian in california. brian. >> booyah coach cramer booyah. >> booyah right back at you. what's happening. >> right on jim i'm a first time caller and a charter club member. >> yes. let's make let's make some money together brian. >> coach. coach i've owned this stock for several years now with nothing to show for it. what do i do coach, buy, sell or hold air b and b? oh. >> man, i've been looking at it too. and i'm telling you that whole class of equities from that period that came public, they're all on fire. except for this one. i think you buy air b and b. all right, listen to me. the clock is ticking on this year for the bears. and if the

market doesn't go lower soon and they can't put their money to work, well, they're going to have to ban their ideology or abandon the idea of being money managers. well, mad money healthcare has been one of the worst performing sectors this year, but johnson johnson started to stand out from the group. i'm running through the reasons why then. axon. axon has been one of the great growth stories over the past few years. do you know why i think the outsized gains can continue? i'm digging the company's latest numbers to see where it might be headed and then apple this week, keurig doctor pepper stock is going from bubbly to flat. over the past few weeks, i'm taking a look at what's behind the move, and maybe it is time to take a sip of the stock. stay with cramer. >> don't miss a second of mad money follow jimcramer on x. have a question tweet cramer hashtag mad mentions. send jim an email to madmoney.cnbc.com. or give us a call at one 800

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upgrade your phone up to 2x a year with premium unlimited from xfinity mobile. plus, get a free 5g phone. >> never chase a receipt again. read love finance. >> this year. health care has been the worst performing part of the market by far, which is what makes the handful of winners in the group all the more impressive. kent, johnson and johnson as of last night's close, j&j was the 10th best performing healthcare stock in the entire s&p 500, up 21.5% for the year. now, if you've been paying attention to this one, that might come as quite a surprise. j&j still has major litigation overhang. and more important, it's primarily a pharmaceutical company in a market that hates pharma, or at least before it did. nearly every other big pharma name is solidly in the red for the year. so how the heck did johnson and johnson defy the gravitational pull of this health care bear market? first off, while j&j is

mainly a drug company, it's not just a drug company. it's also got a terrific medical device business that accounts for 36% of their sales. their med tech division has been a terrific source of steady growth for this part of the company, focused on four major areas cardiovascular, orthopedic, surgery, and vision. the cardiovascular business has been a standout, bolstered in recent years by jnj nearly $17 billion acquisition of biomed and its roughly $13 billion deal to acquire shockwave medical in the spring of last year. j&j also has great franchises and really exciting technologies in other areas like robotic surgery, neurovascular care and digital health. but because it's still the smaller part of the business, i feel like their med tech unit is still underappreciated to many investors view j&j as just a drug company. it isn't. however, i've got to say their drug business is terrific. after spinning off their over-the-counter businesses can view two years ago, they're left with all the good pharma stuff with a much higher growth rate. the over-the-counter portfolio would be a real headache right now. health and human services secretary rfk jr apparently wants to blame

tylenol use during pregnancy for allegedly causing autism. i don't buy it, but what matters here is that tylenol is not a problem anymore. of course, like many mature pharma companies, j&j has some patent and patent issues. it happens. their most important drugs stelara, which is treatment for psoriatic arthritis and other autoimmune conditions, is starting to face generic competition for the first time this year, resulting in a 39% sales decline in the first half of the year. that's what happens when a drug goes generic. but we've known about this for a long time, and j&j has done a fantastic job to move past this big patent expiration. in the first two quarters of the year, j&j pharma business has been has both grown and outperformed sales expectations by fairly wide margins. despite the enormous revenue hit from stelara. overall, the analysts are looking for 5% growth from the pharma division this year, which is incredibly impressive given that their biggest drugs down 30%. what's driving this performance? first, in the immunology business, jnj is a drug similar to stelara called tremfya, and that's picking up

a lot of the slack. tremfya sales were up 25% for the year, and they were up 31% in the second quarter. it's not yet big enough to fully make up for the loss to sales, but it certainly helps. more importantly, j&j has a fabulous oncology business. it's simply on fire. with sales up 21% in the first six months of the year. when its most recent conference call, the cerebral ceo joaquin duato, opened his remarks with a discussion of the oncology portfolio. and he had an ebullient about this business, predicting that jnj will be number one cancer treatment company by 2030, with oncology sales of a staggering $50 billion. duato went on to call out three particular areas of strength in multiple myeloma. jnj has treatments in every line of therapy. they're now treating 80% of myeloma patients second, in lung cancer. the company's chemo free combination treatments are proving very effective and jj is seeing strong prescription growth from doctors. third, in bladder cancer, which has just been a death sentence. frankly, the company just received a priority review for its first

of its kind drug releasing system, which jj expects to launch later this year. that'll be big. frankly, there's more to the pharma strength than i have time to get to because the drug business here is so enormous. in total, j&j has 13 drugs with double digit growth rates, and overall, the rest of the drug portfolio is growing up so well that the loss again, loss of exclusivity for stelara afterthought. so there's a lot to like about the core business. but what about the talc lawsuits that held this stock back for years and years? as i as i've mentioned before, this is you who hasn't exactly been resolved. but the stock's been able to come roaring back because wall street's finally able to look past it. now that's happening for a couple of reasons. first, earlier this year j&j changed its legal strategy. previously, they tried to fix the problem in one fell swoop with a big across the board settlement, including a prepackaged bankruptcy of a subsidiary that would be used to pay off the plaintiffs. that move was blocked by the courts, so j&j decided they just do it the old fashioned way and fight these lawsuits one at a time in court. and so far, you know

what? they've done a pretty good job. they have a good track record now in terms of beating these talc claims one on one. i also think there's a feeling that at this point, the plaintiff's lawyers pursuing these cases have overplayed their hand, as jnj put it in their announcement, that they've been returning to the tort system to fight talc claims. let me tell you, this is how hard, how hard fighting they are. quote the disclosures made under oath in the red river bankruptcy affirmed that the talc litigation is a plaintiff, lawyer driven fake tort premised on junk science and fueled by third party litigation financing, including from foreign sovereign wealth funds. end quote. and by the way, for what it's worth, i also think that the change administration has helped j&j on this front as well. president trump's not exactly his big fan of lawsuits unless they're coming from him. maybe. but he does seem to be a fan of j&j, which, by the way, he credits for making his hair look so beautiful. so after a couple of years where the stock was in purgatory, jj is now

having a standout year in spite of the overall weakness in healthcare, especially in pharma. they're defying the broader, broader group because they have the right portfolio, with the robust med tech business supplementing the core pharma business and no over-the-counter business to drag them down. and because j&j drug division has proven to be much stronger than expected across several major areas, especially oncology, wall street is no longer fixated on the lawsuits or the fact that they're number one drugs now facing generic competition. and look, despite the nice gain to start the year, j&j still only slept for 16.5 times this year's earnings estimates, below the market multiple. with a nice yield that's just under 3%. very rare triple a balance sheet. bottom line here with so much momentum but still a reasonable valuation, i think j&j can keep running maybe for a while. the next target is the company's early 2022 all time high of 186. and change within sight, up less than ten bucks from here. after that, i say it could go through to $200 back in. >> coming up, can this law enforcement software company

keep its momentum going? cramer is going deep into axon next. >> cnbc live ambitiously. >> here i. come on and here i am travis hunter. double trouble. >> lights out in the black hole. >> joe cool icy cold. it's time to rock and roll. giant size hopes you can't handle the rich. but you gotta beat the champs. cause you know what it is. come cause you know what it is. come around apollo. come. junius started out pushing carts when he was 18. 20 years later, he's leading his team of over 300 associates to be their best. who knew you could level up like that? i knew! power outages can be unpredictable, inconvenient, and disruptive to your life,

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builders don't just dream. we deploy. >> builders don't use hammers, we use keyboards. >> i build products that help our customers do more. >> builders know next big thing won't build itself. >> because i build digital moments that matter for every customer. >> a couple really winning companies i like to check in on from time to time, and some of them get better with every single look. consider the case

of axon. axon enterprise that's the law enforcement technology formerly known as taser international. they now make both non-lethal weapons and police body cameras, along with evidence management software, to handle all the video from those cameras. now, here's a stock that's rallied almost 800% over the past five years. individual stocks making so much money, including a 26% gain for 2025. and i'm proud to say that i've liked this one all the way. i think it's just got more room to run. and i'm going to tell you why. you all know taser. these devices have been adopted by a majority of state and local law enforcement agencies in this country. even after decades of service, taser remains in growth mode. their latest model, the taser ten, launched in 2023, has been adopted faster than ever. these non-lethal weapons account for a third of axon. sales in the business, was up 19% last quarter. but don't forget this is a razor razor blade business model. every time you use the taser, you need to buy a new cartridge. that's what money is. the future of axon, though, is all about body cameras and

evidence management software. but within the hardware side of the business, axon now offers surveillance drones as well as a suite of tactical indoor drones to help with high risk situations. they have counter drone technology, too. in fact, their sensors and frequency jammers are actually being used by the ukrainian army to fight russia. although axon sees this becoming more of a security business here in the us focused on areas that need high levels of protection, they've got virtual reality training equipment too, that helps police officers for everything from traffic stops to active shooter response. while this vr segment is still a small part of the business, it about roughly 10% of revenues. it's growing like crazy. up 87% last quarter. yet another reason why axon could deliver knockout set of numbers when the company reported last month. this was the sixth consecutive quarter with 30% plus revenue growth. very few companies can do that. rarefied atmosphere. plus, management sees a line of sight to bookings growth in the high 30s range this year, too. not surprising, given that the company saw some of the largest deals in its history last quarter. but the biggest driver of earnings, and the reason i

am so darn optimistic on axon is this software and services division. while it's just under half of total revenues, it makes up 55% of the company's gross profits because the margins are so high. software and services had a 75.6% gross margin in the latest quarter, thanks to the strength here, axon reported annual recurring revenue growth of 39% in its most recent quarter. this isn't a junior company. 39%. even more encouraging, their software growth came mostly from axon generating more business from existing customers. they had a net retention revenue retention rate of 124%. now, anything over 100% means you're getting more business from your old customers. and look, this isn't anything new. axon retention rates have been near 120% for more than 20 consecutive quarters. they're loved. in the end, law enforcement just really thinks this axon software package is terrific because they have the number one digital evidence management platform. their tech lets police, security store, organize and share evidence from a centralized location.

the vast majority of axon devices are sold with an accompanying evidence management license. for example, the body camera business is mainly a way for the software division to get its foot in the door. on top of that, axon has all sorts of digital tools that help with real time operations like location and service area monitoring. and all of this plugs back into that evidence management platform, along with the company's enhanced productivity tools. the goal here is to have fewer police officers stuck on desk duty. now, this includes products like draft one. that's a generative ai assistant that converts body worn camera audio into structured draft police reports, or redaction assistant, which quickly removes sensitive content by simply clicking words anywhere in a transcript. there's also priority ranked video audit, which uses ai to scan transcripts and other data points, and then ranks videos by importance so police departments can focus on the most critical evidence first. now, these are just a few of axon's main many productivity enhancing software tools, but they stand out because

management highlighted them last quarter as being real time savers. officers saved an estimated and i thought this number was incredible 12 hours per week when they use axon's video audit software, they save 11 hours per week from the police report software and ten hours per week from the redaction assistant. individually, that's some nice time savings, and when you put it all together, it's a game changer for law enforcement. this is something axon ceo rick smith, who's been with us since the show began, told us the last time he was on mad money. take a look. >> we want police out keeping our streets safe. and unfortunately, they've been bogged down just doing paperwork and data entry. and this is one of those things. look, it's not the sexiest ai in the world, but automating bureaucracy has huge dividends in productivity. and that means effectively, it's like increasing a police force 50% effectiveness over night, because those cops are spending more time on patrol and not sitting behind a desk.

>> it makes so much sense, doesn't it? just makes so much sense. like you watch all those cop shows and they're always miserable. they're in, you know, the station house, they want to get out. they're trying to find the bad guys and helping us. look, this is incredibly important to police departments around the country. axon's own research finds that only 14% of law enforcement agencies they surveyed reported being fully staffed, and that, on average, patrol officers spend just 46% of their time on active policing, with the rest of their time devoted to the boring administrative stuff that rick smith trying to get rid of. axon can't totally eliminate paperwork, but they can make it a lot less time consuming. that's a great secular trend. so it's no wonder that their software product bundles have become increasingly popular. axon's i era plan bundle saw 150 million in bookings last quarter, which is huge given that this plan sold just 100 million in bookings in all of 2020. for now, the company keeps launching new products like real time translation for body cameras, policy chat to give officers easy answers for policy questions, unlimited smart detection for auto identifying humans and videos. auto transcribe, which turns

hours of audio audio recordings into searchable time sync transcripts. every new software tool makes the whole ecosystem more valuable, and it seems customers are taking notice. on the last conference call, management pointed out, and i'm going to quote here, every quarter that goes by indicates more and more of a contribution from new products with new products, by the way, making up over 30% of bookings last quarter. that's just what you want. one more point. axon has been making a fortune, but most of that's from the united states. management's gotten increasingly optimistic about their ability to expand into europe and the rest of the world. they also see funding tailwinds from the one big beautiful bill act. when i spoke to ceo rick smith, he noted that taser adoption within the national guard remains far too low, leaving plenty of room for growth. certainly, if the president wants to use the national guard like a police force, they've got to be outfitted like a police force. that might not be your ideal policy, but it's certainly a great business opportunity for axon. here's the bottom line. while axon is a big for the year, the stock has now pulled back more than 15% from its august highs. and

i think you're basically getting that incredible last quarter for free here. anytime this stock pulls in i'd be a buyer. it's had a great run i can't say it is just beginning. i can say, though, that axon has been so creative and so helpful to police departments that i think the stock could continue to rally for a very, very long time. let's take some questions. why don't we start with alfredo in florida? alfredo? >> yeah. jim, how are you doing? jim, i have a question. after witnessing oracle's success in their earnings, what does this mean for a company like cisco? can cisco achieve similar results in the next earnings and beyond? and what is your opinion. is it a buy hold or sell. >> thank you. this is a great question alfredo. we own it for the chapel trust. it's not done anything. it's not done anything. i wish that oracle were more relatable to it. it's not. the problem here is that cisco doesn't have the kind of growth that those companies

have. but why do we own it then? for the trust? because it doesn't have the risk. and i think that not every stock has to be in there making it so that you're going to get something that could be a big pop like oracle. i like some slow and steady. you got a good yield. you got good management. now we're going to go to nico in illinois. nico. >> jimmy chill. >> got to say we're surprised the nyse and its board didn't catch my roaring 20s. booyah! some short and sweet months ago. >> i found myself surprised and chagrined by that. how can i help you? >> yeah. well, jim, let's get to business with all the unreal noise surrounding tariffs. how does a real money indicator like zim or even symbotic influence the supply chain and commodity market? >> nico stumped. jimmy chill, i don't know. i don't know that company. and i feel bereft and actually somewhat down by the fact that i don't because i can't help it. but i will do more research and i will come back to you. thank you. now, i like exxon's long term growth prospects. and given the stock's recent pullback, i

think now is a great time to start a position in the company. hey by the way, much more mad money ahead including you're going to love this one. my take on the announcement of doctor pepper's breakup. many of you guys know keurig. you have one at home. and i had a doctor pepper for lunch today. this stock has gained over 20% over the past month. i'm going to tell you whether to buy or not. and it's been 24 years since the tragic events of september 11th. i'm sharing my memories from that fateful day, and why it's more important than ever that we never forget. and of course, all your calls rapid fire in tonight's edition of the lightning round. so stay with cramer. >> celebrating 30 years of squawk box tomorrow. secretary of the treasury scott bessent on the economy, tariffs and the on the economy, tariffs and the fed. squawk box 30 tomorrow, in gabby's 4 years at walmart, she's... become a certified technician. doubled her salary. supported both her mom and her son. (♪♪) who knew your career could drive your future? i knew.

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in the stock of keurig doctor pepper, which has lost over 21% of its value ever since. the company revealed a rather ill advised breakup plan. in fact, the stock sounds so much, i'm actually wondering if this stock i really didn't care for is now a buying opportunity. for those of you who haven't been following this one, keurig doctor pepper is one of the biggest beverage companies in america. although it often feels like an afterthought versus coca-cola and pepsi. despite the fact that doctor pepper overtook pepsi as the number two soda in america last year, they got a huge house of brands canada dry, snapple and w7 up, and of course, the keurig brewing system, which is obviously a very different business model. that brings me to the cause of this sell off. keurig doctor pepper, as it currently exists, was created in 2018. keurig green mountain acquired the old doctor pepper originally. after that transformative merger. the stock was a solid performer, climbing from the mid 20s to a high of 41 and change how they made a fortune during the pandemic. as at-home coffee consumption skyrocketed, but

the stock struggled to gain ground in the past three years after the pandemic ran its course. now, some of that is because of worries about the gop and weight loss drugs that thought to be not that good for soda business. some of it is about people going back to the office and not needing a machine at home. and some of it is just the rise of energy drinks as an alternative to coffee. that said, doctor pepper sales and earnings actually never stopped growing, even as the stock went out of style in the wall street? rightn august 25th, doctor pepper announced plans to acquire jd pete's pmi, another major coffee company, for about 18.4 billion in cash. once that deal is complete, they plan to break up the company into a soft drinks business and a coffee business. in other words, it's a planned merger breakup like united technologies mergers arrow aerospace business. with raytheon splitting into three separate entities. once the news broke, the stock got just pulverized. and the meat itself

is what's gotten kind of crazy. i think it's made a ton of sense for keurig dr pepper to break itself up. coffee business. soda business actually don't really belong under the same roof. once you spin off coffee, there are two separate companies can focus on what they do best. and when you look at those two companies individually, you know what? i'm finding them pretty attractive. the coffee business will instantly be the largest pure play in a $400 billion growth category, led by four $1 billion plus brands. coffee should be a lower growth than soda business, but the scale of business gives them plenty of opportunities to cut costs, especially with the jde peet's merger. the soda business is going to be higher growth with better margins initially, and without coffee, it should be much more nimble to be able to pursue even more growth opportunities, especially in categories like energy drinks. we're curing doctor peppers late to the game, but starting to gain ground thanks to the acquisition of ghost late last year. but if this breakup is so great, why the heck has this stock plunged more than 21% in the last few weeks since it was

announced? okay, for starters, even though spinning off keurig is a good idea, it's all. it's obviously a tacit admission that the whole michael corbat merger was a big mistake. that was basically letting us know that they've been off track. for the past seven years. i don't know about you, but that doesn't inspire a lot of confidence over here. but at this point, the original merger is ancient history. so far, i've seen a few criticisms of keurig. doctor pepper is doing that really hit home at first. has to do with the peet's acquisition. in order to complete the merger, doctor pepper is going to have to lever up according to the deal announcement. quote, the transaction will be funded through a combination of new junior, senior, unsecured and junior subordinated debt and cash on hand. end quote at the end of the day in june, the company had just over $500 million in cash on the balance sheet. so given that this is an $18.5 billion deal, they're going to take on a lot of debt they're going to be leveraging. second, some people think that keurig doctor pepper is paying too much for pizza, especially

when you consider that before the breakup, this acquisition will shrink the company's margins. wall street hates shrinking gross margins. finally, the whole transaction is way more complex than it needs to be. not only do you have a merger breakup, but you have an international merger breakup because pizza's headquartered in amsterdam. long story short, the bears see this as a needlessly complicated story and risky way to break up the company. doctor pepper could have just spun off the coffee division without buying pizza first would have been a much cleaner story. the breakup would have happened a lot sooner. you know what? all these criticisms are fair, but the deal is happening. the question you need to ask is whether or not, at this point, these prices. you think the cure doctor pepper stock represents value. we only care about where stock is going, not where it's been. if you want a company with a perfect track record of strategic decision making, whoa. this one is not for you. >> they know nothing. >> but if you want a company that's finally headed in the right direction with a stock that's gotten too cheap, then i think keurig doctor pepper

makes a lot of sense. first, the right to break up the business. in retrospect, there were never any real benefits to combining a coffee machine company with a soda company. wall street likes bite size companies that are easy to who happily buy a pure play doctor pepper, and another constituency who buy a pure play jury, but i don't think there was that much of a not, let's say, not a ton of overlap between these two groups. this is how breakups create value. money managers who were turned off by the combined entity might happily buy one of the components as soon as it trades separately. second, in terms of valuation. now this is what really intrigues me. i think finally, the stock has gotten way too cheap. if you use keurig doctor pepper's current enterprise value, that's the metric we're going to use here, the enterprise value. and you divide it by the company's trailing 12 months earnings before interest, taxes, depreciation and amortization, or ebitda. you get an enterprise multiple of 8.5%. this is a metric we like to use in merger or breakup situations. coca-cola is an enterprise multiple of 21. pepsico's at nearly 14. of course, that

ignores the new debt that keurig dr pepper going to have to take on to buy the gdp. but even if we assume that they're going to plan to borrow 1818 billion, the stock would have an enterprise multiple of 11.4, which is still a huge discount to coke and a small discount to pepsi. i think this cap is pretty compelling. of course, there will likely be twists and turns over the next year and a half as this merger breakup unfolds, so i need more details before having real conviction in the new companies that will be created by the breakup. but the bottom line regardless of how keurig doctor pepper got to this point, i think the breakup could unlock a tremendous amount of value given how much the stock has come down since the announcement. i think you have to be a buyer, not a seller. as shocking and contrarian as that is, the current wall street wisdom on the matter. mad money is back after the break. >> coming up cramer takes your calls and the sky's the limit. it's a fast fire lightning round. next.

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>> you found it, then? >> of course i did. >> lightning round is sponsored by charles schwab. trade brilliantly. >> it is time to. in my set, up. and then the lightning round is over. are you ready, ski daddy? let's go to steve in new york. steve. >> hey, big jimmy choo. thank you. man, what you do for us? thank you for all you do for us every day, people. every day. thank you. i'm in a wheelchair. this is all i can do for income. i'm on margin. i know that's not good. i own 500 shares and want to add to this. to me, it

seems like a patriotic purchase as well as financial. what do you think of mp? >> okay. first, i want you to. i want you to do well. i want you to get off margin mp materials. i don't want you to buy more with margin. i like i think, the stock the company has convinced me convinced you ceo, that it is worth more than it's selling for. i have been a little bit worried because it has doubled. i think you're fine. but don't. please don't buy any more. you're fine with what you have. let's go to andrew in california. andrew. jim. booyah! >> so this tiny company is working to obsolete the epipen by putting the drug in an oral dissolving strip that you can put in your wallet. and it had a successful phase three trial. have you heard of a of therapeutics. >> no i've not. but if that's what they do i've got to be very, very interested. i have an epipen because of a problem i have. and that would be remarkable if we could get that. i have to do more work. let's go to blake in tennessee. blake. >> hey, jim. it's an honor for this club member to speak to

the chill man. and i wanted to give. i wanted to give a belated congrats on 20 years of mad money. and also a special congrats to newlywed ben stoto. >> oh, my. that was some blowout wedding, i tell you at least, and i had a great time at it. congratulations. best wishes. let's go to work. >> hey, i'm calling you on what was a company spun off from honeywell, which i know the club loves the stocks at a 52 week high. an upgrade from morgan stanley and some insider buying. what are your thoughts on ticker reezy? >> i resideo. okay, so candidly, when it was first spun off, i was not a fan because i did not think rates were going to come down and really be good for the housing market. now, that's precisely the kind of stock that you should be buying. i've been saying to the club that home depot is the best stock to buy right here for the last 40 points. i like it, but i think video is interesting even up here. let's go to joe in illinois. joe. >> booyah, jim. >> we are. >> a company by the name of

lens therapeutics, has a new product called viz. they have full fda approval and promise to rid you of your reading glasses for ten hours. with samples of viz shipping in october and full rollout later in q4. is this the kind of stock where values in the eye of the stockholder, or one where hindsight will be 20? >> this is no. this is the kind of stock let's understand each other. i don't know the stock. i don't ever cuff it. i never just say on air. you know what that sounds like good stock. because that you don't deserve that. and you're my boss. i will look into this one, too. i think this sounds very interesting. like the epipen stock that we heard earlier. the replacement pen. let's do some work. we'll come back. we'll use it. we'll talk to ben stoto, who just had those, like, terrific nuptials. let's go to tom in oregon. tom. >> well, thanks, jim, for taking my call. you have made me. thousands say. >> i have a good. >> question and a good shout out, by the way, to the. >> railroad police all over the. >> united states on this date of nine over 11. my question is,

with the. >> burlington northern. >> boeing out of the csx and the upn's and the cp and kcs, i'm wondering the cni, the canadian national. >> canadian national is way too cheap. you got that 2.7% yield. you've got very low price to earnings multiple. i like canadian not. and that ladies and gentlemen, is the conclusion of the lightning round. >> the lightning round is sponsored by charles schwab. junius started out pushing carts when he was 18. 20 years later, he's leading his team of over 300 associates to be their best.

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give. yes, i'm talking about what happened 24 years ago, the cataclysmic nine over 11 tragedy that killed so many. i never thought about it much at the time, but there are now millions and millions of american adults who were too young to remember or who hadn't even been born yet. that terrible day, a few blocks from here, is an amazing museum that tells you everything about that day that you need to know. it's a hard museum to walk through without shedding a tear or more than that, but i urge everyone visiting new york city to go there, take the day off. contemplate. i wish that every school in the nation made it a field trip, so that those not alive then, can understand just how sad nine over 11 was and how much was lost. museum is thoughtful and comprehensive. it will teach you what happened that day, and you'll learn a lot, even if you've lived through that tough period. i was down here that day, paralyzed, transfixed by the possibility that we were next to be hit. our building, right across the street from the new

york stock exchange, was locked down, and the sky turned black for hours as the wind blew the smoke our way. i remember looking out the window and thinking it was simply too dark. at 11 a.m. a total terrorist made eclipse of the sun. just a random thought while i tried to call pop to tell him i was alive, but there was no dial tone. after four hours, the fabulous people from the fire department led us out of the building. i had no idea of the losses, especially the first responders. i thanked them perfunctorily. i always regret that. we walked toward the east river and i thought it was snowing in most places. it was two inches thick. the snow i learned later was made up of steel, glass, aluminum, and yes, people. people who are no longer with us. at pine and williams street, there were charred remains of hundreds of research reports from dean witter, a former division of morgan stanley, that had been blown our way. people wrote these people who were most likely no longer with us. when we got to the east river, a police boat picked us up and took us to a first aid station

in new jersey to be checked for injuries. i had none. they then let us out near a highway. i hitched a ride on the interstate to home, the driver oblivious to what occurred. back then, i worked at the street.com, the online publication i started in 1995. we lost a cherished employee on nine over 11, bill meehan, a fantastic strategist who doubled as chief market analyst for cantor fitzgerald, a firm that almost got wiped out, losing 658 people. just awful. i was in touch with bill pretty much every day, including that day. and then i wasn't. never again. if you worked on wall street, you knew somebody. cantor. we all knew people because the firm was made up of convivial folks who covered you with gusto. today i went over to their headquarters as part of cantor's annual charity day. they took some pictures. a lot of selfies. did some trades. and most important, i got to raise money for charity. in this case, i chose the baby's heart fund, which raises money to teach doctors how to do pediatric heart operations, among so much else for infants with congenital heart defects.

my wife, lisa, lost a child after complications from a heart transplant. grace was two and a half years old. we raised money so fewer children die like her. it's a fabulous cause. i used to think nothing good could ever come from nine over 11. cantor fitz changed that. thank you for your kindness. everyone remember. recall. learn. we must never forget what happened on that gorgeous but horrifying september day 24 years ago. i'd like to say that there's always a bull market somewhere, and i promise to try to find it just for you right here on mad money. i'm jim here on mad money. i'm jim cramer. see behind some of the world's most successful consumer products, joins the tank. the key to this game is buzz building and distribution -- healthy food is a human right. you're coming across as so scattered. -and what are your total sales? -$1,000. we're at a crossroads here. there's a real demand for this. -i'm gonna make you an offer. -whoo!